3 Business Organizations
The owners of a corporation are...
Stockholders
What financial statement is for a POINT IN TIME?
Balance Sheet
What type of asset is land?
Property, Plant, and Equipment (PPE)
What is the normal balance for a cash account? (Debit or Credit)
Debit
ABC company received $400 cash in exchange for services performed? What account is debited and which account is credited? And for how much?
Debit = Cash for $400
Credit = Revenue for $400
What are two advantages of a partnership?
1. Easy to establish
2. Shared Control
3. More economic resources/ broader skill set
Which financial statement reports revenue and expenses?
Income Statement
What type of liability is a loan payable? (Most of the time)
Long-term liability
What is the normal balance for the Common Stock account? (D or C)
Credit
ABC company paid $300 in cash for supplies. What accounts are debited? Credited? and for how much?
Debit = Supplies for $300
Credit = Cash for $300
Which of the 3 business organizations are LIMITED liability? (LLC)
Corporations
Which financial statement reports net income, dividends, and beginning retained earnings?
Statement of Retained Earnings
What type of asset is a trademark?
Intangible Asset
What is the normal balance for a note payable due in 5 years? (D or B)
Credit
ABC company received $600 in cash in ADVANCE from a customer to perform services in 4 months. What accts are Debited? Credited? for how much?
Debit = Cash for $600
Credit = Unearned Service Revenue for $600
What are two advantages of corporations?
1. Easy transfer of ownership
2. Easier to raise capital
3. Limited Liability
What is the accounting equation? (Formula for the balance sheet)
Assets= Liabilities + Stockholder's Equity
What two things go into Stockholder's Equity? (____+_____=SE)
Common Stock and Retained Earnings
What four accounts have a normal balance of a credit?
Liability
Revenue
Retained Earnings
Common Stock
ABC company paid employee salaries of $4000. What acct is debited? Credited? and for how much?
Debit= Salaries and Wages Expense for $4000
Credit = Cash for $4000
What is a disadvantage of corporation?
1. Double Taxation
2. Owner's don't have much control
What is the formula for the Statement of Retained Earnings?
Beginning RE + Net Income - Dividends= Ending RE
What type of liability is an account payable due in 5 months?
What three accounts have a normal balance of Debit?
Asset
Expenses
Dividends
ABC company paid $2500 for a one-year insurance policy (in advance). What acct gets debited? Credited? and for how much?
Debit= Prepaid insurance for $2500
Credit= Cash for $2500